Tough Environment for Green IPOs due to Market Volatility

Green IPO’s which were being planned with the recovery in the world economy and renewed interest by investors have shuddered to a halt.The European debt problems has put a question mark whether the governments which are the prime drivers of green companies can continue their support. This combined with the market gyrations which are being seen in the market makes it a tough environment for green IPOs . I have been writing in my earlier post how the IPO market around the world has frozen over the last week. Green IPOs are not immune to the general IPO markets and have been put in the deep freezer as well.

On Friday, Spain’s Renovalia said its planned public offering had run into trouble as investors took fright and two sources said Spain-focused Engyco was also struggling.

Last week, another Spanish solar energy generator, T-Solar said it had delayed its 300 million euro IPO, blaming uncertainty over subsidies.

Spanish renewables firm Renovalia said it had postponed its planned 153 million euro ($205.3 million) Madrid listing due to febrile markets and a lack of clarity on regulation.

Investors have been on alert this week as the euro zone wrestles with the prospect of contagion from Greece’s debt crisis and Spain has come under particular scrutiny. Sharp falls on Wall Street overnight, even though partly attributed to a trading glitch, added to the sense of disquiet.

Renovalia was subject to market fears that the Spanish government could cut existing subsidies as well as planned ones when it launches its 10-year renewables plan later this year. The prospect has led to sharp falls in renewables stocks.

Renovalia was set to make its market debut on May 12 and said on Friday it will try to revisit its IPO plans after the summer. It had planned to list up to 25 percent of the company in a deal valuing it at up to 629 million euros ($843.9 million).

The company, which runs photovoltaic and thermosolar plants in eight countries, has 2,400 megawatts of projects on its order books and wants fresh capital to expand further abroad.

It is 91 percent owned by the Ortega family.

Solar utility Engyco has put bookbuilding on hold for an up to 1 billion euro London listing, two sources close to the deal said.

One of the sources said the company made the decision after markets came under pressure in both Britain, where the company planned to list, and in Spain where it intends to buy solar power assets.

The company said in an emailed statement it remained determined to complete the IPO.

The source said the offer of newly issued shares at 1 pound each had attracted strong demand but as the market had become volatile, the company opted not to ask investors to commit.

Demand came from green-focused specialist and mainstream mutual funds in Britain, Switzerland, France and Canada. Income funds were also well represented on account of the company offering a yield of at least 7 percent, he said.

Neither source was able to predict when bookbuilding would resume.

Engyco first announced its intention to float in late March and revealed it had agreements to buy solar assets worth around 640 million euros.

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in